Business rival makes highest ever online libel payout

A company and its chief executive will be paid the highest damages yet awarded for libel on the internet in the UK. Peter Walls and Gentoo will be paid £119,000 by rival firm owner John Finn.

Finn initially denied posting a series of defamatory and abusive comments but changed his position during a trial last year and has agreed to pay out the £119,000. A trial to assess damages was due to begin on 1 April.

Finn agreed the payout after negotiations with Gentoo and Walls and a statement was read out in the High Court today explaining the settlement. Finn will also be liable for as-yet-undetermined legal costs which are expected to run into hundreds of thousands of pounds.

Gentoo is a social housing company that was formerly the Sunderland Housing Group. Finn runs rival firm Pallion.

The case centred on remarks made by anonymous posters to the Dads Place website.

"From behind their cloak of anonymity, Dads Place used their publications and in particular the website to conduct a malicious, unpleasant and relentless campaign of libel and harassment," Gentoo's lawyer Hugh Tomlinson QC told the High Court.

"The claimants brought proceedings for libel in respect of numerous seriously defamatory allegations ranging from corruption to nepotism and the promotion of female employees in exchange for sexual favours," Tomlinson told the court.

Gentoo will be paid £5,000, other employees £14,000 and Walls £100,000 in what is believed to be the biggest payout in UK legal history over online libel.

Finn has paid £125,000 to the court already as an interim payment to cover costs, and the court will hear a case on costs if he and Gentoo and Walls, represented by law firm Olswang, cannot come to an agreement on costs.

Tomlinson told the court that the people behind the Dads Place website tried hard to stay anonymous. "Those responsible for the publication of the Dads Place Publications took careful steps to conceal their identities and it took many months of painstaking investigation to identify just some of those responsible for Dads Place and bring proceedings against them," he said. "As a result of those proceedings the website was finally shut down in July 2006."

Tomlinson said that the allegations made against his client had had a significant effect on him.

"Mr Walls was forced to withstand an almost daily barrage of anonymous allegations, threats, and abuse and suffered very serious damage to his professional and personal reputation. Many other Gentoo employees were subject to wholly unacceptable levels of harassment and abuse."

"This case illustrates that the internet is not a lawless state," said John Mackenzie of Pinsent Masons, the law firm behind OUT-LAW.COM. "The court can and will award substantial sums of money for false and defamatory statements. While the court was told of the difficulties of tracking people down, the fact remains that they can be tracked down."